Virtues of low debt

They didn’t go overboard during the housing boom. No wonder when the crash came, these smart realtors had very low debt.

It pays to be conservative instead of being overtly aggressive even during the best of times. When the big boys of real estate were acquiring land at inflated prices across the country, there were some conservative players who kept their cool and continued to do business as usual.

When the tsunami came in the form of crashing real estate prices and low demand for houses, the conservatives were the least affected. The reason: they stuck to their core competency and kept their debt position at bare minimum.

Playing it safe, some went for joint ventures, where they were involved in construction and selling the properties while the land owner remained a sleeping partner. In this way they were able to maintain liquidity as land is one of the biggest costs for a real estate player.

—Virendra Verma